Question

Write an analysis assessing how this major economic event influenced supply, demand, and economic equilibrium in the US economic activity: Collapse of the Soviet Union in 1991 and the end of the Cold War, and the “peace dividend”

Answer 1

US economy benefited to large extent with ceasation of cold war in significant way and following are some of the impacts-

1. Americal economic model of Capitalism was accepted globally

2. US got control over most of world organisations eg. WTO, IMF, World Bank and thus, US controlled major economic decisions affecting the world.

3. US began the policy of economic sanctions to control the trade.

4. USD accepted as global monetary currency and currency of trade

5. Major economic commodities were quoter in USD at international level

6. Strong economic growth, creation of job, low inflation and rising productivity witnessed e.g. Invention of Internet, US becoming world's financial backbone

7. Reform of welfare enacted through the Personal Responsibility and Work Opportunity Act, which significantly reduced the amount of time individuals can stay on welfare and as a result, increased the labor force participation rate

8. Focus on economy and less expenditure on defence products